KMID : 1124020220380010051
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Korean Social Security Studies 2022 Volume.38 No. 1 p.51 ~ p.78
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Labor Supply Effects of the EITC in Sample-Selection Models
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Park Ji-Won
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Abstract
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In this paper, sample-selection models are employed to decompose the effects of the EITC(Earned Income Tax Credit) program on labor supply (days and hours worked), in terms of the effects on the labor force participation of jobless people (EME) and the effects on labor supply changes among employed persons (IME). As a result of analysis using data from the Korea Welfare Panel Survey from 2015 to 2018, it was found that EITC had the effect of increasing the number of working days per year and working hours per week by 52 days and 7 hours, respectively, for low-income workers. However, it was found that most of the increase in labor supply was due to the employment of the unemployed, and the labor supply decreased slightly in the case of workers who worked even before receiving the benefits of the EITC.
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KEYWORD
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EITC, Extensive Margin Effect, Intensive Margin Effect, Sample-Selection Model
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